How Syria Has Stretched and Squeezed the Oil Price

U.S. Secretary of State John Kerry makes a point next to Russian Foreign Minister Sergei Lavrov. Oil prices have closely tracked diplomatic wrangling over Syria. Photo-Reuters

The price of oil has followed the newsflow out of Syria closely.

So, as the threat of U.S.-led military strikes has come and seemingly gone, crude is back pretty much exactly where it was before a chemical weapons attack was reported on Syrian civilians.

That was August 21. The oil price didn’t move much, though, even then, as Syria’s production had already dropped to negligible levels.

But on August 27 the price began to move. international rhetoric had heated up, with Secretary of State John Kerry saying that the U.S. and its allies were considering military strikes on Syria after “undeniable” evidence of a chemical attack. Suddenly, talk was of regional contagion – into oil producers Iraq, Iran or Saudi Arabia.

Brent crude futures opened at $111.16 that day and duly closed over $4 higher at $115.29.

The next day oil was up further, hitting $117.34 before falling back to close at $116.33. Barack Obama’s “red line” – the promise to punish use of chemical weapons – was continually mentioned.

Brent stayed in the higher range for nine days, until Russia surprised the market by offering to broker a diplomatic solution.

However, since September, 9 the price has dropped from $115.93 to today’s low of $108.73 – firmly back in pre-crisis territory.